Abstract / Synopsis

The Buniyamin Engineering Sdn. Bhd. was incorporated on the ih
May 1994. The company was established as construction and civil
engineering contractor. Zean Tech Sdn. Bhd. was the associated company
created as domain company to undertake new venture especially in IT and
telecommunication services.
Since the beginning of operation, Buniyamin had been involved in
various small to medium size projects costing RM 1 0,000.00 to RM
1,OOO,OOO.OO. Since Buniyamin were in the starting stage of development,
the company size were quite small. As the Managing Director of the
company, Nik was running the company with the help of two other
directors, Mr. Loo and Mr. Ah Heng. Buniyamin received first proposal from Takenaka Corporation to
join-venture for development of Proton City. The second proposal came
from Ericsson Communication Sdn. Bhd. to privatize its maintenance and
services department. In evaluating the two proposals, he did not seek any
assistance from any body, using his knowledge learned in his MBA course
and tried to apply to the real situation.
In analyzing the proposals, several methods were used in analyzing
the feasibility of the proposals; they are accounting rate of return (ARR),
pay back period, decision tree, standard deviation, risk adjustment
discount rate and the financial modeling.
From the above method, Nik emphasized the analysis of using
decision tree method for the evaluation of the joint venture between
Takenaka Corporation and Buniyamin Engineering Sdn. Bhd. for the
development of package A3 and A4 of Proton City in Tanjung Malim,
Perak. While for the investment analysis of privatization of system service
provider (SSP) by Ericsson to Zean Tech Sdn. Bhd., Nik used the financial
modeling and simulation of the cash now and return by using the Excel
spreadsheet.
As conclusion, the proposal for the joint -venture between
Takenaka and Buniyamin for the development of Proton City was feasible
and gave high returns and needed only a small initial capital investment.
The privatization proposal by Ericsson was much risky and needed high initial investment and gain little return which could not cover the operation cost of the Zean Tech Sdn. Bhd., as the result the proposal was
not feasible and canceled. Both evaluation techniques were the tool that
was used by the Buniyamin and Zean Tech Sdn. Bhd. in evaluating the
proposals of investment and facilitate the decision making by management
of both companies.